AGM setback for group's share placing

ELAN received a rebuff from its shareholders yesterday when they turned down its attempt to get approval for a resolution allowing it to issue new shares in the market. The result of the shareholder vote restrains the directors from issuing new shares without issuing them to all shareholders.

ELAN received a rebuff from its shareholders yesterday when they turned down its attempt to get approval for a resolution allowing it to issue new shares in the market.

The result of the shareholder vote effectively restrains the directors from issuing new shares without issuing them to all shareholders.

This amounts to a restriction on the company organising a placing of shares. Elan will still be able to raise funds from the market by organising a rights issue where every shareholder would have a chance to subscribe for new shares if they wanted them.

Elan needed 75pc approval for the resolution to be passed but when proxy votes and votes at yesterday's meeting were totted up it emerged that the company only had the support of 73.2pc of the shareholders who voted.

There are understood to be some 200m shares which have been authorised but not issued. Some 350m shares are in issue. The company denied yesterday the failure to get the resolution passed would impact on the day-to-day running of Elan.

New Elan chairman Garo Armen told the annual meeting that the previous management team, which consisted of former chairman and ceo Donal Geaney and deputy chairman Tom Lynch, had suffered "decision-making paralysis".

"There was a decision-making paralysis at the end. At the end, decision-making was rendered ineffective because of a perception of a lack of credibility. At the end they could not function properly."

But Dr Armen said an internal investigation of the company's accounting found "no signs of improprieties" and pledged to make its earnings reports easier to understand.

Dr Armen, who took over from Mr Geaney last month, said Elan was trying to regain investor confidence after concerns about an accounting probe by the US Securities and Exchange Commission, the failure of an experimental Alzheimer's disease drug and competition for its best-selling medicine wiped about $17bn off its market value this year.

Dr Armen said Elan aimed to make its financial reports clearer so "you do not have to go through 100 footnotes" to understand them.

Elan was continuing to search for a new chief executive and has found eight possible candidates for the job and has started interviews, he told about 150 investors at the two-hour meeting.

After the annual meeting, he acknowledged the board had not fully discussed plans for a $60m investment to create 300 jobs in Macroom, Co Cork. The jobs move, since cancelled, was announced during the election campaign.